Income Effects on Exchange Rates. Assume that the U.S. income level rises at a much higher rate than does the Canadian income level. Other things being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar?
Increase, increase, may not be affected
Increase, may not be affected, increase
May not be affected, increase, increase
Increase, may not be affected, decrease